Hi, i am confused how bands B&D have been determined, in terms of the formula ILF(L+D)-ILF(D)/ILF(I), 1. does the numerator represent the "10m xs 5m" from the reinsurer whilst the denominator represent the cedant's expectation of their business? 2. I am a bit confused what the question means by the information provided by the cedant being "policies it expects to write". Does that mean, the cedant has proposed the xs/limit for the reinsurance policy? or the T&Cs which it applied to its own business? 2. when considering band B, i assumed the formula would be [ILF(15)-ILF(5)]/ [ILF(10-ILF(1)] . However, has the ILF(15) on the numerator been capped at ILF(10) due to the UL of band B being 10? 3. In terms of Band D, why is the numerator ILF(15)-ILF(10) rather than ILF(15)-ILF(5)? is that because the reinsurer's XS falls outside the cedant's proposed band? note: i read the existing thread on this question but it seems to be a circular reference error! Thanks!
Take a look at the attached file, I find it helps to write things out as a little diagram. Yes This is the direct business the cedant intends to write. Yes Yes
